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  4. Penalties After Incorporation under Companies Act, 2013 – Part II

Penalties After Incorporation under Companies Act, 2013 – Part II

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This article is the second part of a two-part series on penalties after incorporation of a company. You can read the first part of the article Penalties After Incorporation- Part I  Chapter VII to Chapter XII
No Section No and Description Defaulting party Civil Liability Criminal Liability (Imprisonment)
34) Sec 88 – Failure to maintain a register of members/debenture-holders/security holders Company Every officer in default Min: INR 50 thousand Max: INR 3 Lakhs Continuing failure- INR 1 thousand for every day of default
35) Sec 89 – Failure to make a declaration in respect of a beneficial interest in any share. Failure to file return pertaining to the declaration with the registrar. Person Company and Every officer in default. Max: INR 50 thousand Continuing failure- INR 1 thousand for every day of default Min: INR 500 Max: INR 1 thousand Continuing failure- INR 1 thousand for every day of default.
36) Sec 91- Closure of register of members or debenture holders or other security holders without notice/shorter notice/ in excess of limits prescribed. Company and Every officer in default. INR 5 thousand for every day of default Max: INR 1 Lakh
37) Sec 92 – Failure to file annual return. Company Every officer in default. Min: INR 50 thousand Max: INR 5 Lakhs Min: INR 50 thousand Max: INR 5 Lakhs Max: 6 months OR Both
38) Sec 94 – Refusal of Inspection or making a copy/extract. Company and Every officer in default. INR 1 thousand for every day of default Max: INR 1 Lakhs
39) Sec 99- Default in complying with Sec 96 – AGM Sec 97 – Power of the tribunal to call AGM. Sec 98 – Power of a tribunal to call meetings of members OR Orders of Tribunal. Company and every officer in default Max: INR 1 Lakh Further INR 5 thousand for every day of default
40) Sec 102 – Failure to comply with provisions related to statement to be annexed to notice calling a meeting Every promoter/director/manager/KMP in default INR 50 thousand or 5 times the benefit accruing to the persons mentioned in column (3) or any of their relatives Whichever is higher
41) Sec 105 – Failure to mention members eligibility to appoint a proxy. Wilfully/knowingly issues the invitation to appoint a proxy. Every officer in default Every officer in default Max: INR 5 thousand Max: INR 1 Lakh
42) Sec 111 – Failure to circulate members’ resolution Company and every officer in default INR 25 thousand
43) Sec 117- Failure to file the resolution and agreement. Company Every officer in default(including liquidator) Min: INR 5 Lakhs Max: INR 25 Lakhs Min: INR 1 lakh Max: INR 5 Lakhs
44) Sec 118 – Failure to maintain the minutes of proceedings of the general meeting, meeting of Board of Directors and other meeting and resolutions passed by postal ballot. Guilty of tampering with the minutes of the proceedings of the meeting. Company Every officer in default Person INR 25 thousand INR 5 thousand Min: INR 25 thousand Max: INR 1 Lakh & Max: 2 years
45) Sec 119 – Refusal to inspect or copies not furnished within the specified time. Company Every officer in default INR 25 thousand INR 5 thousand
46) Sec 121 – Failure to file the report on AGM before the expiry of a specific period. Company Every officer in default Min: INR 1 lakh Max: INR 5 Lakhs Min: INR 25 thousand Max: INR 1 Lakh
47) Sec 124 – Default in complying with provisions related to Unpaid Dividend Account Company Every officer in default Min: INR 5 lakhs Max: INR 25 Lakhs Min: INR 1 Lakh Max: INR 5  Lakhs
48) Sec 127- Punishment for failure to distribute dividends. Every director in default Company INR 1 thousand for every day of default & Simple Interest @ 18% p.a during the period for default continues Max: 2 years
49) Sec 128 – Failure to comply with the provision relating to maintenance of books of accounts etc by the company. -Managing director -Whole time director in charge of finance -Chief Financial Officer or such other person Min: INR 50 thousand Max: INR 5 Lakh OR Max: 1 year OR Both
50) Sec 129 – Failure to comply with provisions relating to proper disclosure of financial statements -Managing director -Whole time director in charge of finance -Chief Financial Officer or such other person in charge(as appointed by the board In the absence of any of the officers mentioned all the directors. Min: INR 50 thousand Max: INR 5 Lakh OR Max: 1 year OR Both
51) Sec 134 – Contravention of the provisions relating to Financial Statements, Boards Report Etc Company Every officer in default Min: INR 50 thousand Max: INR 25 Lakhs Min: INR 50 thousand Max: INR 5 Lakh OR Max: 3 years OR Both
52) Sec 136 – Denial of the right of the member to inspect copies of the audited financial statements. Company Every officer in default INR 25 thousand INR 5 thousand
53) Sec 137- Failure to file the copy of financial statements with the registrar. Company Managing Director and Chief Financial officer In their absence any director charged by the board with the responsibility In the absence of such director all directors INR 1 thousand for every day of default Max: INR 10 Lakhs Min: INR 1 Lakh Max: INR 5 Lakh OR Max: 6 Months OR Both
54) Sec 140- Failure of the auditor to file the notice on resignation, with the company and registrar & also the C&AG in case of government companies. The right of representation abused/auditor has acted in a fraudulent manner Auditor Auditor Min: INR 50 thousand Max: INR 5 Lakhs Min: Amount involved in the fraud Max:3 times the amount involved & Min: 6 Months Max: 10 Years *Fraud involving public interest: Min: 3 years
55) Sec 143 – Failure of the auditor to report fraud by employees against the company Auditor Cost Accountant Company Secretary Min: INR 1 Lakh Max: INR 25 Lakhs
56) Sec 147 – Contravention of Sec 139 to 146(aspects related to audit and auditors) Contravention of Sec 139/143/144/145 Contravention of  provisions knowingly/willfully with the intention to deceive the company or its shareholders or creditors or tax authorities Company Every officer in default Auditor Auditor Min: INR 25 thousand Max: INR 5 Lakhs Min: INR 10 thousand Max: INR 1 Lakh OR Min: INR 25 thousand Max: INR 5 Lakhs Min: INR 1 lakh Max: INR 25 Lakhs & Max: 1 year OR Both Max: 1 year
57) Sec 148 – Default in complying with the orders of the Central Government pertaining to cost audit Company Every officer in default Cost Auditor Min: INR 25 thousand Max: INR 5 Lakhs Min: INR 10 thousand Max: INR 1 Lakh OR Min: INR 25 thousand Max: INR 5 Lakhs Max: 1 year OR Both
58) Sec 157 – Failure by the company to inform DIN to Registrar. Company Every officer in default Min: INR 25 thousand Max: INR 1 Lakh Min: INR 25 thousand Max: INR 1 Lakh
59) Sec 159- Contravention of: Sec 152- appointment of directors, Sec 155-Prohibition to obtain more than one DIN and Sec 156-Director to intimate DIN Individual/Director INR 50 thousand OR Further, a fine of INR 500 for every day of default. Max: 6 months
60) Sec 165 – Contravention of maximum no. of directorships The person accepting appointment as director Min: INR 5 thousand Max: INR 25 thousand for every day during which the contravention continues
61) Sec 166 – Contravention of duties of directors. Director Min: INR 1 Lakh Max: INR 5 Lakhs
62) Sec 167 – Functioning as director after attaining disqualification. Director Min: INR 1 Lakh Max: INR 5 Lakhs OR Max: 1 year OR Both
63) Sec 172 – No specific punishment under chapter XI Company & every officer in default Min: INR 50 thousand Max: INR 5 Lakhs
64) Sec 178 – Contravention of provisions of Sec 177 related to Audit committee and nomination and remuneration committee and stakeholders relationship  committee Company Every officer in default Min: INR 1 lakh Max: INR 5 Lakhs Min: INR 25 thousand Max: INR 1 Lakh OR Max: 1 year OR Both
65) Sec 182- Political contribution made in excess of the limits Company Every officer in default 5 times the amount contributed 5 times the amount contributed & Max: 6 months
66) Sec 184 – Failure to disclose interest held by directors in any company/contract/arrangement Director Min: INR 50 thousand Max: INR 1 Lakh OR Max: 1 year OR Both
67) Sec 185 – Loan to directors/any other person in whom the director is interested/give a guarantee in connection with the loan taken by the director or such other person in contravention of the provisions of this section Company Director/any other person Min: INR 5 Lakh Max: INR 25 Lakh Min: INR 5 Lakh Max: INR 25 Lakh OR Max: 6 months OR Both
68) Sec 186-Contravention of provisions pertaining to loan and investment by the company. Company Every officer in default Min: INR 25 thousand Max: INR 5 Lakhs Min: INR 25 thousand Max: INR 1 Lakh & Max: 2 years
69) Sec 187- Contravention by the company regarding investments of the company to be held in its own name. Company Every officer in default Min: INR 25 thousand Max: INR 25 Lakhs Min: INR 25 thousand Max: INR 1 Lakh OR Max: 6 months OR Both
70) Sec 188 Contract entered into/ authorised in contravention with the provisions outlined under the section-Related party transactions. Listed Company: Violation by Director/any other person Other Company: Violation by Director/any other person Min: INR 25 thousand Max: INR 5 Lakhs OR Min: INR 25 thousand Max: INR 5 Lakh Max:1 year OR Both
71) Sec 189 – Failure to disclose the interest of the director in any contract/arrangement Director INR 25 thousand 72)Sec 190 – Failure to maintain a copy of the contract of employment with managing director or whole time director/written memorandum in absence of a written contract & also failure to keep it open for inspection without fee Company Every officer in default INR 25 thousand INR 5 thousand for each default
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